The 4% Rule
I am well into my 50s now and one of the things I am keenly aware of is retirement. I have been reading about how much money you need to retire in order to maintain your current standard of living. I have been reading about how much money you need to "not run out" of money during your retirement. Here is what I have come to realize...I will never be able to retire. I live basically paycheck to paycheck. We have some buffer in savings, we have a retirement account, and I have an investment account. But there is a rule of 4% in order to maintain your lifestyle after you retire. Here is how it works: Take your current salary ($156,000) and that is what needs to equal the 4% you take out of retirement accounts each year. For you math wizards, this is easy...multiply by 25 ($3,900,000) and that is the amount you need to have in something like a retirement account. Only draw what you make if possible. On average, an investment account will accumulate 4% per year. But what about al